Five Real Estate Investment Opportunities in 2016

“You will be pleased to know that Lamudi Philippines has got you covered. The global property website takes a look on what are potentially good real estate investment deals this year and the best locations you can find them.”

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18 January 2016 Real Estate News

What will be good real estate investment deals in 2016?

Now that 2015 has come to an end, many would-be real estate investors and home buyers must be wondering what 2016 would bring. Aside from condos in the pricey Makati and Bonifacio Global City, houses in gentrifying neighborhoods, or villas and apartments in newly developed leisure estates, what other property types will offer good returns not just in 2016 but in the years to come.

You will be pleased to know that Lamudi Philippines has got you covered. The global property website takes a look on what are potentially good real estate investment deals this year and the best locations you can find them.

1. Suburban Apartments and Townhouses

One of the most searched property types by Filipinos are apartments and townhouses, especially in suburban areas like Quezon City, Parañaque, and Las Piñas. These properties are very much in demand among renters, especially starting families. One of the reasons is that these property types provide much larger spaces (including parking space for multiple vehicles) than condos, yet they are more affordable than standalone houses.

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Townhouses and apartments are highly sought after by Filipinos because they provide much larger spaces than condos but are more affordable than houses. Photo via Lamudi Philippines

To give would-be buyers and investors an example, three-bedroom door apartments in Parañaque average Php3.5 to Php4 million, or monthly rents of Php18,000 to Php25,000. On the other hand, townhouses in Quezon City can be had for as low as Php2.8 million to as high as Php17 million.

2. Residential Lots

Unlike high-rise condos, where a seemingly infinite number of units can be built within a relatively small plot of land, there is only a limited amount of land developers can convert into subdivisions or gated communities. This is the reason why there aren’t a lot of them within really prime locations in Metro Manila. This is also one of the reasons residential lots in these projects are highly sought-after as their values tend to appreciate quickly.

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Residential lots offer potentially good investments as their value appreciate relatively quickly. Photo via Shutterstock

One example is Alabang West by Megaworld subsidiary Global-Estate Resorts Inc. (GERI), a gated enclave situated between the cities of Muntinlupa and Las Piñas. According to GERI, land values in the 62-hectare township surged 19 percent in the 11 months since its launch, from Php47,000 to Php56,000 per sqm. The company also announced that 80 percent of Alabang West’s 788 residential lots as of late 2015 have already been sold.

The same can be said for Ayala Land’s Vermosa project in the cities of Dasmariñas and Imus in Cavite. Within this estate is The Courtyards project, a high-end gated community where an average lot measures approximately 693 sqm. This low-density community, upon completion, will have about seven to eight lots per hectare.

3. Strata-titled Offices

Unlike offices intended for IT and business process outsourcing (BPO) firms, which are built and owned by real estate developers and rented to third-party companies, strata-titled offices can be bought by individual investors and buyers and have them rented out to companies. Many people liken them to residential condos (hence, the term “strata-titled”) as they are similarly owned and managed.

For property buyers looking to diversify their investment portfolios, strata-titled offices makes sense as there is currently a shortage of office space in Metro Manila, especially in the major business districts. This means that rental rates for offices in these areas are expected to increase over the next few years.

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Due to the current shortage of commercial space in Metro Manila, strata-titled offices offer attractive investment options in 2016. Photo via Shutterstock

In addition, Colliers International said in its third quarter 2015 report that decreasing land-bank options in the Makati CBD, Bonifacio Global City (BGC), and Ortigas Center is also pushing capital values of office buildings upward.

Among strata-titled developments currently on the market include Alveo Financial Center along Ayala Avenue, which has 363 units and sells on average Php223,000 per sqm. Others include The Stiles in Circuit Makati, also by Alveo Land, and has 283 units, which sell for about Php198,000/sqm.

Also in Makati is Century Properties’ Century Spire. This 60-story, Daniel Libeskind-designed tower will rise in Century City, and will have approximately 283 office units for sale. Average price is Php203,000/sqm.

Other strata-titled office towers for sale in Metro Manila include Capital House in BGC (Avida Land; 222 units; Php142,000/sqm); One World Place in BGC (Daiichi Properties; 283 units; Php136,000/sqm); and Parkway Corporate Center in Alabang (Filinvest Land; 390 units; Php168,000/sqm).

4. Townships Outside Metro Manila

With land values in Metro Manila becoming very expensive, property developers are looking further afield for their next big-ticket projects. Among these projects include Century Properties’ Azure North in San Fernando, Pampanga, where the company to plans to duplicate its success with the Azure project in Parañaque; and Ayala Land’s Alviera in Porac, Pampanga, and Vermosa in Laguna and Cavite.

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Property developers are looking further afield for their next big-ticket projects. One of which is Ayala Land’s Vermosa in Cavite. Photo courtesy of Ayala Land

These developers are banking on their previous success to push these projects forward and all look to perform well in 2016. Ayala Land, for example, will be spending Php70 billion over the next decade on its Vermosa project, which when completed will include office, retail, hotel, residential, and educational segment. In late 2014, Ayala Land Premier started marketing residential lots in The Courtyards section of Vermosa, and has since sold Php4 billion worth of inventory.

5. Upscale condos in the major CBDs

Metro Manila’s condo boom is far from over, but developers are holding back on heir new launches due to massive supply especially in the mid-market segment. This does not mean, however, that no opportunities are available in the condo market. On the contrary, high-end condos, especially larger ones, are expected to perform well both in capital appreciation and rental rates.

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Despite an oversupply in the mid-end market, high-end and luxury condos still offer attractive returns in 2016. Photo via Shutterstock

According to Colliers, condo vacancy rate is lowest for luxury condos in Makati, expected at 5 percent to the third quarter of 2016. This is due in part to Metro Manila’s leasing market, driven primarily by expats and the BPO sector. On the other hand, JLL reported that rents for Metro Manila luxury condos continue to grow, albeit moderately, on the back of strong demand from expatriate employees of MNCs.

Read More: http://www.lamudi.com.ph/journal/five-real-estate-investment-opportunities-in-2016/

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